 Well, I'm Dan Rondi, I hold the Shrier Chair here at CSIS. This is a topic that's particularly close to my heart, but before I start, I want to welcome my friend Paul Wolfowitz who's here as former president of World Bank for being with us. There are also a number of folks who are involved with the doing business work who are here, World Bank staffers. There's also a panel that I'll talk about briefly as well, who I think are also here. I think this is a consequential meeting and I think this is going to be a consequential program. The World Bank's most successful program doing business ranks countries on the ease of starting and running a formal business. It has helped spark major free market reforms in over 100 countries during its 10 years of existence. Doing business ranks countries by how hard or easy it is to start a formal, meaning tax-paying, bank loan-taking business. In many countries, setting up a business by the book can cost tens of thousands of dollars and conceivably years of fighting red tape. Trading in an informal economy is bad for prosperity, no access to bank loans, many opportunities for bribes, and less folks paying any taxes at all. The fact that the World Bank releases an annual ranking gives doing business power and influence in unique ways because of the bank's pull in developing countries. A small number of vocal countries on the board of the World Bank dislike where they end up on the doing business rankings. As a result, they've called on bank management to change the methodology of the report to reflect aspects that they can perform more highly on and to stop ranking countries according to the ease of doing business. In addition, several quarters are calling for the World Bank Group to give doing business project to another institution, a very bad idea. Doing business is carried out each year without large foreign aid payments. Doing business frankly reflects a broadly American and widely accepted view about development, not just an American view, but a widely more internationally widely accepted view about development. The private sector is the main driver of development. Doing business was incubated with very strong support from the United States of America. Some of the methodology comes from USAID. This is something that came from the 80s and 90s in USAID. It was one of two branches of influence in terms of how the methodology was put together. It was supported by the Bush administration through funding, through technical support, and political cover. And then a lot of brave and smart people in the World Bank, serious economists and technical leaders in development, provided both the technical leadership to make it happen and also the bureaucratic political support because there are forces within the World Bank itself that dislike doing business, not either for ideological reasons or out of frankly professional jealousy. It is the most successful and most widely followed piece of the World Bank. In a world where ODA matters less and knowledge and ideas matters more and if the World Bank is supposed to be the knowledge bank, the power of the World Bank's research and the power of the World Bank's imprimatur matters. So outsourcing this is a very, very bad idea. Killing or crippling this is a very, very bad idea. Jim Kim became president in July of 2012 and with his ascent anti-reform forces within the bank's bureaucracy and on its board, sensed their chance to kill, cripple, or outsource this index. After a messy board meeting last summer where no consensus was released, Jim Kim punted and convened the DBR panel, the Doing Business Review panel, dbrpanel.org. Take a look to review Doing Business. That panel is expected to release a recommendation about the fate of Doing Business by June of 2013. At a time when the Obama administration and development thought leaders speak about the importance of funding activities that are evidence-based and data-driven, Doing Business has a mountain of evidence and a mountain of data. We have two of some of the greatest hits of papers, one by one of my friends, Laora Clapper, about entry regulation as a barrier to entrepreneurship, completely driven off of the Doing Business metrics. There's another, a policy research working paper licensed to sell the effect of business registration reform on entrepreneurial activity in Mexico. Again, a World Bank paper. Evidence-based and data-driven. I get this drilled into my head every day by development thought leaders and by people who lead development organizations in the United States and in the international arena every single day. If we believe that, let's walk our talk. Let's back it up. So I find it very, very strange that we're even having this discussion of questioning the validity of Doing Business that we're questioning the methodology, or they're questioning outsourcing this. Frankly, it's borderline outrageous. The United States was asked two years ago at a time of fiscal austerity to support the general capital increase of the World Bank. As a result of that, we would retain a big seat at the table and exercise influence with the World Bank management and its allied shareholders in favor of things like strengthening Doing Business. The United States renewed its commitment to the World Bank through the general capital increase and it's time for the World Bank to renew its commitment to a proven program that supports free markets, cuts regulation, increases government revenues to pay for public services that we all care about, and empower entrepreneurs. Killing, crippling, or outsourcing index to another institution is one of the worst things the World Bank could possibly do and would be a direct rebuke to all those that have supported the general capital increase, whether in the United States or in other countries as well. Let me, I'm gonna stop there. We have two very distinguished speakers who are gonna be speaking about the Doing Business work. The first speaker I've asked is Juan Jose Dabub, who is the former finance minister of El Salvador. He's a former managing director as well at the World Bank, so he can speak to it from both sides of this conversation. Juan Jose is a very good friend and it's a real pleasure to have Juan Jose here. Juan Jose, the floor is yours. Well, thank you, Dan, for the invitation. I think this is indeed a very important topic. I see a lot of friends. Good morning, Paul, my former boss and good friend. I have spent about one third of my life in academia, one third of my life in the private sector and one third of my life in the public sector. My family owns several businesses throughout Latin America. I have some businesses here in the United States. I'm in the board of directors of several companies here in the United States, in the Middle East and in Latin America. I have taught at Princeton and I was for 12 years in government in El Salvador without belonging to any political party. In those 12 years working for three different administrations, we were able, El Salvador was able to go from hardship to investment grade. That was possible because the leadership of the country was able to convince and persuade the constituency as well as Congress and other organizations within the country to move in a particular direction. The one we chose was to follow a similar model to the one that Singapore, Australia, New Zealand, Ireland, Chile and a few other countries had followed which had to do with opening up their economy, strengthening their governance structure and empower people to take destiny into their own hands. We were able to do it. One of the tools that I personally use many, many times to persuade politicians that this was an important set of reforms to do was matrix like the doing business report. There were other tools, there are other tools also available, the index of economic freedom, the competitiveness indicator, but the doing business report has some additional values because of the source that is actually producing it. So whenever we wanted to reform, say, the telecommunication sector, the power sector, doing a pension reform or at the end which was the last thing I was involved in which was dollarizing the economy in order to fully integrate El Salvador to the worldwide economy, we were touching the nationalistic fiber of the politicians who had to vote for this loss by showing them how other countries were beating us. The doing business report is not a thermometer that tells you what the temperature is. There are no exact tools that can provide that kind of information. It is a navigation chart that helps you move in the right direction, that helps you enable the environment to attract investments from the private sector which ultimately create the real jobs that people want in countries like El Salvador. When I joined the bank, I found already in 2006 the environment that Dan just described to us. An environment where certain countries, especially, believe it or not, from Europe, well, I do believe it because when you see how they're close to socially system they have, they are afraid of competing and of doing the reforms they have to do and therefore tools like these are not necessarily the most attractive again to some countries and we also have some other countries from other countries yet developing countries that were in very difficult conditions from countries in Africa, in Latin America, Asia or the Middle East were actually very happy and very encouraged to use a tool like the Doing Business Report to help them make some of the decisions they needed to make in order to come out of their very difficult situations to an extent following the example that at the time I was in government we had to do. So during those years I was a managing director at the World Bank, again responsible for Africa, the Middle East, Asia and Latin America. I saw people, there are a few of you sitting around here the former minister of finance from Lebanon here who can also testify to this. There are many other people who I know use the Doing Business as a fantastic tool to convince sometimes the president of the country many times to convince parliament or congress and often to also work with civil society and the private sector on precisely enabling the environment to attract the investments that are needed in those countries. Those debates that were already taking place at that time were overcome because there was a firm and clear leadership at the helmet of the organization first in the hands of Paul Wolffowitz, then with Bob Selleck, both of whom were always very, very supportive of the Doing Business. So part of my message here is whether you come from the private sector, from academia or from civil society, whether you are in multilateral organizations, you do research, you are in a think tank, in a do tank, you are in transparency international or in other organizations, this is the kind of tool that helps enhance the dialogue and the conversation among the different stakeholders in a society and even though it's not perfect, just like no index is perfect, it is a fantastic tool to follow, it is a fantastic way of observing progress, it is a fantastic way to also see when we deviate from a particular goal or objective. So when I finished at the World Bank in 2010, my four year mandate, guess what? I started a foundation that deals with issues related to climate change, the adaptation side of climate change and guess what? The first thing we developed was a matrix, an index that is called the Global Adaptation Index. The Global Adaptation Index was literally moved into Notre Dame University that yesterday at 12 at the press club, we pass on the baton to Notre Dame. The Global Adaptation Index has two sets of data. On vulnerability, we take data from the ground that measures access to water, energy, coastal protection, et cetera. And on the X axis, we are measuring readiness, which means how enable is the environment to attract investments to reduce vulnerabilities for people in need. That index, those matrix come from information of the doing business as disclaim in the website and it has a .9 correlation with the doing business report. So developing matrix like this is important for developing countries, for developed countries who want to take their countries to the next stage. The leadership within the bank needs to understand this, needs to take it into their own hands and avoid the risk of diluting it or moving it away from our organization that sometimes don't have too many things to show for while the doing business is one that should make it proud and therefore it shouldn't lose it. Otherwise it will just become one more organization out there like the many that are out there that they seldom achieve goals and objectives. Thank you very much. Juan Jose, let me just take, let me ask you one question. It's a little bit of a leading question. Then I might ask former president Wolf was perhaps to respond to the same question since we're lucky to have him here with us today. Okay, so you're the president of the World Bank and you're presented with several vocal minority folks on your board, perhaps some effective senior level bureaucrats that may question the methodology and are saying, I don't like this methodology or several vocal and large, medium-sized developing countries who say I don't like this. If you're the president of the World Bank, how do you manage that when you have a non-consensus on the board? How do you lead the organization? If you could just, what would be your response to that if you were presented with a situation like that on the board? Now maybe ask President Wolf, what's to say to him? Well, it's very hard to be in someone else's shoes, but my first response is that that is the first test they are putting to the president of the World Bank and he can decide to leave the World Bank with good ideas and great products or give away his leadership to lots of other people within the organization and therefore, that will be a lost opportunity. So my first advice is, defend it, protect it, enhance it, make it even better. Otherwise, you are giving up your authority and your power in what has proven to be a very useful tool. Thank you very much. President Wolf, perhaps if you were presented with a messy board meeting, maybe not a full consensus, you had several vociferous shareholders that said, I don't like this methodology. I don't like how I rank or I think it's an incomplete ranking or it's an imperfect ranking you had senior people, perhaps vice president level folks or directors come to you and say, oh, this is an imperfect measure, it doesn't come, what was your response then and what would your advice be to President Kim in terms of how to lead the bank now? I'll give you the floor. Well, I guess, first of all, what I would say is this is a tool that does no harm, it only does good. Certain European countries, and I guess it's better not to name names here, certain very successful Asian economies not to name names don't like where they're ranked. Well, big deal, it doesn't make any difference. This tool is not used to allocate bank resources. There's a sort of phony one called, remind me what it is, it has a GPIA, which is supposed to allocate IDA resources. No one understands the formula so you can do whatever you want with it. This is transparent by the way and I've had experience of talking to presidents of countries who were struggling, struggling a good deal more than France or China struggle and told them how bad their ranking was and I expected to get an argument about all your methodology is all wrong. I got the exactly opposite reaction. They went back home and changed how they perform and for countries that are successful to say we wanna take this tool away from countries that are struggling and are trying to get out from excessive regulation. It's really tragic and I would add to the tragedy of it all as I think you point out in some of your literature. One of the results of these hyper-regulated economies is not only that they do badly but that huge fractions of their labor force work in the euphemistically called informal economy and even larger fractions of the female working force which means they're working outside of whatever limited protection these lousy regulations are supposed to provide them. The notion that somehow labor conditions will be improved if 80% of the, if only 20% of the labor force works under the regulations and the other 80% are working in an illegal economy is backwards logic and I just find it, well I don't find it astonishing. Unfortunately even back then I could sense the resistance but the answer to your questions, I think the president of the bank has enormous discretion in these matters. We had a rather bloody fight over whether Republic of Congo, Brazzaville which is a significant oil producer where 70% of the population lives in poverty while the president of the country spends I think it was $6,000 a night on his hotel room in New York. You would have thought that putting some conditions on debt relief for the Republic of Congo would have been what in English we call no brainer but in French it translates into something apparently the opposite. And at one point the French member of the board trying to railroad through his proposition said I think he had the numbers right, that 22 of the 24 board members support our position and I said well that's fine but you can't make motions only the president can and I'm not gonna move for debt relief until we have a solution here that is satisfactory to some kind of minimal standard. The issue was whether they would have to submit their oil revenues to some kind of impartial audit for more than a year, you would again as I say I don't know what the word is in French but in English it's seemed pretty obvious to me but the president has that kind of authority. I don't think they ever forgave me for doing that one but this is not controversial it shouldn't be controversial and I think it rests on the principle of transparency if people could see the light of day on this one I think the people who are trying to undermine it would have to run away I hope. Thanks very much Paul, thank you very much. My friend and colleague Simin Jankov has not joined us yet so I'm gonna call a little bit of an audible and we're gonna go to the next panel. Juan Jose, thank you very much Paul, thank you very much for that I really appreciate it. Please thank Juan Jose for, thank you very much. We're gonna call the panel up. Paul, Randy, Randy if you would and Andrew we're gonna go ahead and start with a panel I'm calling an audible, okay. So this panel is going to be from policy makers, development practitioners, development advocates. We're gonna have a second panel talking about methodology and from economists but I think this is a panel about looking back and looking at how, these are folks who are present at the creation and these are folks that have followed the issue since in a variety of ways. So I'm gonna hand the floor over to my very able colleague Joanna Nessa-Tuttle who's our Senior Vice President for Strategic Planning and the co-director of the US Leadership and Development Project here at CSIS, Joanna. Good morning, thanks Dan, good morning everyone. I'm really happy to be here with this incredible set of people to talk about sort of the genesis of the doing business report. I wanna give you a little bit of context before I introduce our folks today. As Dan said, we've just released a major report here at CSIS called Our Shared Opportunity, A Vision for Global Prosperity. This is a major partnership we've had underway with Chevron. We have spent two years doing research, looking at working groups, reports, events, discussions and we spent the past year with a large council of which Andrew Nazios was a part and the group came out with a message that was quite concrete and strong. They said, look we need to really focus on broad based economic growth as a core part in a fundamental starting point of our development activities and we need the private sector engaged in that and we need to look at trade and investment as really vital parts of our development toolkit. We need to use them more creatively and effectively. So we did talk about the doing business report as part of this and we talked about the importance of some of the policy changes and the policy landscape in developing countries as a vital sort of a vital impact on the level of investment and the type of investment that's gonna flow into countries. So the doing business report kinda kept popping up over and over. So we wanna talk about it in that broad context. I actually personally have to say I find it surprising that it's only 10 years old because it seems like it's had an outsized impact. It is a name brand that's kinda known wherever you talk about it and it seems like its impact has been more durable than 10 years worth but it really has been 10 years and so we've got with us here today a group of people, two of whom were really present at the beginning. So we wanna talk about what spawned the report, what was the thinking at the beginning, why was this undertaken. Andrew Nazios was the AID administrator as the time that this was getting underway and we're gonna ask him to talk a little bit about the genesis and what where AID was and the US government was on the thinking. Randy Quarles has been, he's served in various roles but under secretary of the treasury, assistant secretary of the treasury and he was also the, he was the executive director. I'm gonna just make sure I get this right. Executive director of the IMF and really working on helping to stand up the report. So in terms of the context, the policy environment in which this was created, we wanna hear their thinking. And then Paul O'Brien is with Oxfam America and has spent a lot of time on the ground in developing countries looking at how do you, how do you motivate development and get it moving. So we wanna ask him from his perspective and from the NGO perspective practically how do these activities and these rankings actually take hold or resonate in developing countries and maybe what is sort of his perception, the perception of his colleagues in some of the NGO communities. So we're gonna start with you, Andrew Natsios and just ask you, just talk a little bit about the genesis and you're thinking about where this set of activities fits in the development landscape. Thank you very much. This is a complex and long topic but let me just mention that when I got to AID there was not a lot of focus on economic growth. There was a tax going on against the Washington Consensus. Joseph Stiglis wrote his book on globalization and its discontents. So in the 80s there was the Washington Consensus, then there was a whole reaction against it, against the liberal international economy, not just demonstrations but books being written. And it seems to me what was being lost was the question of how do we get growth because equitable growth is the most important factor in reducing poverty. It's important to improve social services but you can be well educated and get all your shots and have clean water and starve to death because the economy doesn't produce any food and there are certain countries we're seeing that right now in North Korea for example was an advanced economy in a communist sense but it's now complete wreck and its population continues to starve because of the economic system. We looked to two sources for how to do that. Clearly we're not gonna, we got rid of all our macroeconomists in the 1990s which I think was a disaster in AID. We, I didn't realize the role AID played in the early 80s some of the major economists who developed a macroeconomist were part of AID and AID sponsored a whole set of books being written that were critical sort of a neoclassical approach to economics in the early 80s under Peter McPherson. I didn't know this until I left office. What we looked to is Michael Porter at the Harvard Business School in his books on competitiveness and secondly we started looking what the World Bank was doing and I met Simeon Jankov and we invited Simeon Jankov to come each year he would produce the doing business report to give a lecture to the entire senior staff. Now everybody had to listen to the lecture. There were like 70 people in the room waiting to meeting once a week. 90% of the people were career officers and of course I had packed in a bunch of economists who had hidden when they were doing the layoffs in the 90s they changed their titles. Agriculturalists were laid off education specialists and economists were so they changed it to development specialists. I found 40 agricultural economists who simply dropped the word economists and they became experts in microfinance to save themselves from the purges that went on. And these people I promoted and Simeon became a friend of mine when I went to Georgetown to teach I brought him to teach my classes and he told the stories that he never told in front of AID as to the political opposition in the bank. It wasn't, it was the macroeconomists. There were macroeconomists in the bank who refused to accept that microeconomics had anything to do with growth. Now I asked one of the people who designed who's in his 80s at the time 10 years ago I said why didn't you do this stuff? If you read the Nazi consensus this is not part of it. And he said Andrew the scholarly literature on what we did is incomplete. This was always, the rule of law was always part of it. Business law was part of it. And it never made its way in the literature we sort of stopped making the changes. And so there's this broad attack against a Washington consensus which is in fact a straw man. It's not what was actually discussed by the architects themselves. So we had them, and then we started, I said you know if the bank's gonna resist this Simeon is under attack constantly by the board we know what's going on. It's in, they see the doing business report as an attack on the Napoleonic Code. And for national pride reasons which is I think is the stupidest thing I have ever seen in the World Bank. That people would make policy, well I shouldn't say stupidest because it's very common. All countries behave, they have national pride. But to restrain or to condition reform because of language or some legal code that was written 200 years ago I find it very bizarre. But that's what happened. The French opposition was not based on economics. It was based on the fact that this argued that the common law tradition was more conducive to economic growth than the Napoleonic Code was. You know, it's true. And I can, there's a reason why. There's a reason why. That's not the purpose of this. But anyway, we started putting money aside to fund doing business reports because many developing countries on their own came to us and said how are we gonna do this Andrew? I had heads of state all over Africa saying we read it, we don't like where we are, we don't know how to change this, can you please, and I know this is another thing, no one likes technical assistance. Sometimes technical assistance is very useful. It is very useful. And we can show in many countries where the heads of state and the finance minister and the minister of investment would come to us and say, how are we gonna make the changes? And we would send in teams of technical people to help them rewrite their regulations. And I have to say, most of the regulations that are doing business, Paul's right. You can argue against the Washington consensus that had a negative side to it in some cases, the way it was administered. How is it damaging to change the legal system so you don't have to wait seven years to settle a case? In what legal system is it desirable to wait seven years to settle a commercial law case? In what legal system is it a good idea for a poor country to charge $4,000 for a new business to start? Which was what the cost was in Ethiopia. I met with Melissa Nowe for seven hours and I said, Auto-Melis is a friend of mine. Don't agree with everything he's done, but he was serious about it as a development fresh. He wrote books on it before his death. And I said, you know, you have one of the, he said, we're advancing. I said, you've had a 50% drop in your economic per capita income since you took over. I don't, you know, you're one of the poorest countries in the world. You keep having food emergencies. Every two years we bail you out. This is not gonna work. You've got to do something to make some changes. And he didn't agree to everything, but he agreed to a lot. And when I showed him, how much it costs to do a business, to start a business, he was shocked. And I said, I asked the AID staff why this is. I'm just telling you the story. We don't know for sure. Someone put in the regulations that you had to have and add this big in one of the large newspapers to start a new business. So if a shoe shine boy wanted a permit to do shoe shine, or a little souvenir shop, they had to put, and the cost of it was $4,000. Now I said, who would write a regulation like that? Apparently someone's brother owned the newspaper. So my last point here is, what's very clear in the latest literature, latest debate on economic growth is that Douglas North in violence and social orders is new, it's not new anymore, but, and then Osamoglu and Robinson's wonderful new book on why nations fail have pointed out that we can't just have economists running this. I'm not attacking economists. I think we need them and all that, but we need some people who understand political economy and the politics of elites controlling the economy. That's what this is about. Over a set of decades, rules have been put in place to protect monopolistic and oligopolistic control over the economy by elites who control a political system. And the doing business reports attempts to loosen those controls that the elites have. That's what this is about. And when you have a serious head of state like Melis in Ethiopia, when you show him how there's no downside to reducing from $4,000 to $150, which by the way is the cost of starting a new business in Canada and the United States, or Singapore, what's the downside on that? What is the damage to the society? I mean, I don't understand this. Some of the rules you can argue against, one or two, but the rest of them, there is no downside to it. Why this is now being questioned by the World Bank, I think it's deplorable to be very frank with you. And I think what Simeon went through when he was at the bank is even more deplorable. People should put their egos aside and their culture aside and at least think about what's gonna happen to poor people, because that's what this is supposed to be all about. Thank you. Thank you, Andrew. Randy, I'm gonna switch to you next and ask you to talk about what was happening from your perspective at that time. Button, okay. So just a few comments. So at the time that the Doing Business Project started in 2002 and the first report came out, so at that time, my responsibilities at the Treasury sort of involved the relationship with the ifs and the World Bank, thinking about development policy, among other things. I would obviously like to say that the Treasury had a large role in pushing for the Doing Business Project, but we really didn't. That was something that came out of another set of processes, but we wholeheartedly supported it at the time and why was that? The reasons are actually pretty obvious. First, private sector growth is essential for developing countries to improve living standards. All the official assistance in the world is not really, it's important, it's helpful. It's not really going to make a dent in the fundamental problem unless you have a vibrant, growing private sector. China's shown us that. The second point, again, this is almost embarrassingly obvious. I'm a little embarrassed to say that this was the Treasury's thinking because it's so obvious, but making it easier for people in countries to start new businesses is good for growth. Growth is essential. Starting businesses is good for growth. It's obvious. Equally important, inefficient regulation victimizes the most vulnerable people in any jurisdiction. It's the whole essence of cronyism. Cronyism is impossible without a system of heavy and inefficient regulation and the people who will suffer most are the people who are least able to suffer. President Wolfowitz was a great champion of the Doing Business Report and the Doing Business Project when he was president, but this is something that has been accepted and championed by a range of world bank presidents. Jim Wolfenson was obviously the world bank president at the time that this started and at the time of the second Doing Business Report, he said many countries aspire to protecting the poor, but it's a myth that heavy bureaucratic regulations achieve this goal. Norway, Sweden, Denmark, Finland are all on our list of the 20 countries with the simplest business regulation because they regulate where it counts. They protect property rights, they provide social services and they've found that workers, investors, and even the tax authorities can all be looked after without reams of red tape. Fourth, we really liked, and I particularly liked at the Treasury, the fact that the Doing Business Report and the Doing Business Project involved everybody. So one of the other things that was happening sort of more on the IMF side, also involving the World Bank, was the so-called F-SAP process, the global assessments of financial sectors. In which the US steadfastly refused to participate, largely thanks to reluctance on the part of the Federal Reserve. The Federal Reserve just said, look, this will be a waste of our time. We had set up a global system for the IFIs to assess the financial sector regulation in countries around the world, and we said, that's for others. And what was enormously, and that rankled me, and obviously it proved out that perhaps we could have benefited from someone checking our financial sector regulation, but what was enormously appealing about the Doing Business Project was that it applied to everybody. All members of the World Bank would be assessed, and all members would participate. And the fact that it's last, it's also kind of obvious but it's not quite as obvious as the others, and was perhaps what was most appealing to me about the Doing Business Project and the role of the Doing Business Report. Somehow I spent a lot of my life as a policymaker, although I think of myself as a private sector person. And the successful policy efforts that I have been part of had two key characteristics. So one, they had their genesis in careful, nuanced, and detailed analyses, comprehensive work that provided a solid intellectual framework for approaching whatever the policy issue and question was. And the concepts behind the Doing Business Report had that. They had that in the work of Simeon Jankov, Andrei Shlifer, and they have been supported by the work of a raft of economists since then, including as Andrew just mentioned, Asimoglu and Robertson's latest book. There is a wealth of careful, nuanced, detailed, intellectual work behind the concepts of the Doing Business Report. But the second thing that is important in any policy project that's actually going to make a difference anywhere outside the academy is that that nuanced discussion needs to be condensed into a handful of principles that are simple to understand. They are inevitably, they elide over questions because you can't keep everything in your head all at once, but a policy process that's actually going to change anything has to be assimilable by a vast array of interests, a vast array of people. And when we're talking about development, we're talking about interests in people all over the world across a huge range of cultures. And the great thing about the Doing Business Report was that it condensed this intellectual framework into a set of principles that one can tweak, one can improve, they have changed over time, but that they were assimilable and they were able to be hammered home over and over and over again. And there is no policy effort that I've ever been part of, whether domestically, internationally, whether on the financial structure side, whether on the development side, that hasn't had both parts. And what we liked about this was that it had both parts. It wasn't just a list of principles, it had this wealth of intellectual support behind it, but it wasn't just a wealth of intellectual support in complicated papers without a set of, without a tool that could be actionable. So let me end, let me just end by talking about now, back in the private sector and as an investor, how we think about the principles behind the report. So as an investor, I'm making decisions on the allocation of capital and a lot of jurisdictions around the world. And the threshold question for any investor looking at an opportunity outside his own jurisdiction, the one that he knows the best, is what is the investment climate? And while there are a lot of factors behind the 10 specific elements that are examined in the doing business report that are relevant to the investment climate, but there are factors that are beyond all of regulation that are relevant to the investment climate, still the regulatory obstacles to business, and in particular the specific factors in the doing business report are fundamental. Now, don't get me wrong, I'm not saying that the investors in private equity firms and banks around the world are sort of taking the doing business report and trying to drawing a line, well, I'm not going to invest anywhere that's under 86. Real world investors aren't using it as a tool in that sense, but it is not just an academic or an aesthetic undertaking. The factors that are measured by the report matter, and the effect that the report has of getting countries to improve their performance on those factors matters to real world decisions about where capital is allocated. So let me end by saying that, as everyone knows, these reports have become among the most important regular publications of the bank. They have become in a short period of time, as Janet has noted, flagship publications of the bank. Really almost the same level as the world development report, but with a different style and a different role. And given that style, the doing business rankings are always going to be uncomfortable for every participant, except maybe Singapore. But unless they were uncomfortable, they couldn't fill their role in the policy process. Their role is not to be the intellectual underpinning, their role is to be the action tool. And they've enjoyed the support of a range of world bank presidents. They have a huge amount of academic underpinning. People with a range of policy views who have found themselves agreed on the usefulness of a simple tool to focus attention on regulatory obstacles to business. I think it would be unusual for any organization, public or private, world bank or not, to take what has, in a short period of time, what its consumers have voted with their feet to show is among the most useful things they do and to abandon. That would be a peculiar thing for any organization to do. I hope that after the decade of work that's gone into it, we're not deprived of it. Thank you. Paul, I'm gonna turn to you and ask you to give your perspective here and maybe add a little color commentary. Randy, I'm gonna ask you to press your button again. Okay. So I think it was Oscar Wilde who said the only thing worse than being talked about is not being talked about. And I wanna congratulate Dan because I think this is the right conversation at the right time and I worry that what will do the most damage over the next year will be benign neglect of this discussion. So strategic kudos to you, Dan. Thanks for bringing this together and it's been great to hear the commentary so far and I'd like to respond to some of it in some ways but in the main, I agree with it. Let me start with this observation. Oxfam, we're hosting, this happens for the spring meetings. I think we have more than a dozen folks in town to help influence the World Bank. That's a big investment of time and resources for an organization like ours but they're not talking about doing business that much. Full agenda meeting with the EDs and ministers of finance of different countries pushing various agenda items but not this. And I obviously coming to this discussion was curious as to why and talk to colleagues about where we stood and I got a range of views but in the main I came away with the sense that the challenge from a civil society perspective for the doing business discussion is it's danger of being an orphan and I wanna talk about being an orphan in two ways that I think may be useful for future discussion. One is being a passion orphan, right? So folks in my organization cluster around the water cooler and start shouting at each other, hopefully in good ways in two different kinds of ways. One, we've got the love-based crowd who came to development because of the human connection thing. There's somebody out there they wanna be relevant to, they're passionately motivated by it and they wanna have a conversation about connecting to those particular individuals who are suffering. They may not label themselves this way but they're basically love-based. And the other folks who gather around the cooler are the justice-based or rights-based gang. They get there because of a profound anger about somebody who's doing something really wrong and they want to see that wrong corrected. So you've got the rights-based gang or justice-based gang on the one hand and you've got the love-based gang on the other hand and where does doing business get a hearing? Not well from either side of that equation precisely because of a choice it made. So that's one challenge it faces from the civil society perspective. Here's the other one. It sits as something of an ideological orphan in the debate of our times and you've heard our eloquent speakers talk about it so far. Nobody debates that the pathway forward for most people in poverty now is equitable growth. But of course the interesting ideological debate is around the folks who like the first word or the second word. And so you've got the growth is good gang and all we need to do is drive it, drive it, drive it and don't worry eventually people in poverty will get their fair share and if you don't have growth you don't get anything. And then you have the equitable growth folks who say you know what? The growth discussion will pretty much take care of itself because if you look at the dynamics of how growth happens people with a lot of power, economic power, political power will take care of each other. Growth will happen and we as people who care about development should be putting our collective efforts towards the other side of the equation. It's not that they hate growth, it's just they think it doesn't get enough attention. Some actually do hate growth to be honest, some even in my organization. I mean you've got the climate, anyway okay. Let me not go there. But I do think there's a legitimate concern that on the equity side of the discussion we're not putting our best creative energy towards addressing how to improve growth quality. And the conversation stops there but doing business at some level sits at something of an ideological orphan between the growth is good and the equitable growth discussion or at least it's not explicit enough and I'm gonna come back to that. So how does a campaigning civil society organization come to this discussion? Well honestly we do come out of a history which was so profoundly suspicious of elite capture. Both political and economic and of this new mantra of private sector led development that we came to the whole discussion slowly and somewhat in a cumbersome way. I don't think we were as sophisticated as we should be. I still have silly conversations with my Oxfam colleagues from around the world about the relevance of the private sector. So we just launched a campaign last week called Behind the Brands, challenging 10 food companies in an index to outperform each other in a race to the top on issues like transparency and other things and there were lots of folks in my organization that the outside of this are saying, why are we trying to help big food junk companies perform better? Well guess what? They're driving the global food discussion for better or worse and we better get our heads around it but it's that kind of cumbersome thinking inside CSOs that has slowed down our entry into the doing business discussion. We all are coming around to the fact that in the end of the day, as you said Randall, we are not the protagonists. We'd love to think we are. It's why often we got into the game but it is going to be people lifting themselves out of poverty by setting up the kinds of small businesses we're talking about today and ultimately hopefully paying taxes into the system, holding their governments accountable to use those taxes to deliver the kinds of public goods and services that they need to advance themselves rather than the hotel rooms that don't do nobody any good. That is the development narrative of the future and we have to get our heads into that game. There is also what is profoundly appealing about this, the merciless logic of campaigning because for those folks who sit around the water cooler in the morning, what we have come to realize as civil society organizations, if the rights dimension of things is hard to put your finger on and the love dimension of things is hard to put your finger on, that the new and interesting dynamic is this idea of comparing potentially responsible actors to engage in a race to the top. Now of course there are responsible actors at the heart of this which are the national governments who will or will fail to put in place the kinds of policies that help business work better or not but sometimes for organizations like ours that's a challenging reality to engage with because we operate in 92 countries around the world. We get permission to respond to humanitarian crises and to do other things basically because those governments tolerate us being there often but when it comes time to hold them accountable sometimes being honest even a campaigning organization like Oxfam will be tentative because the net benefit of us holding that government accountable has to be greater than the good we can do by keeping our mouths shut and just helping people. So we are looking for sophisticated ways to hold governments accountable without putting in jeopardy our ability just to do the more humble and specific acts of reaching real people in real ways. And when you come up with an index like this that is comparative, it is transparent, it has this global imprimatur of legitimacy from the World Bank, it helps us engage because it allows us to do that more sophisticated advocacy that says yeah you should be moving up the rankings without getting into the kinds of discussions that ultimately might undermine our ability to function at all. So that's why I'm here today to say this is good, it's ridiculous we're having an existential crisis type discussion about the issue but you if you are advocates for this should be asking yourselves why this thing is an orphan? Why doesn't it elicit more passion of one form or another? Why don't we have more champions? Why does it take Dan to get us all together at this time and say you know there's folks trying to kill this thing, what are we gonna do about it? And I do wanna push you a little bit on that because I wouldn't be Oxfam and representing us fairly if I didn't. So I do think that the organizations that are most responsible either indirectly USAID and thank you for your leadership on this Andrew and how you managed indirectly and then more directly as we heard the story and the US government more generally and the bank more generally. The organizations that were responsible for this should be asking themselves is there a more sophisticated way of taking sides in this discussion around development that can generate more support. At our most unsophisticated level what organizations like ours do is we divide the world simply between sort of country like one country versus another the classic humanitarian rationales we don't pick between Warring Party A and Warring Party B we're just there to serve the innocent but of course what we've begun to realize is that within each of those entities Warring Party A and B there are a set of elite actors who care nothing about the victims on the ground and care only about their own enrichment that we have as a rights-based organization become more fluent in saying hey you know what the right humanitarian action is not to say nothing and hear nothing but to hold those who are truly accountable more so. And I think there's a corollary in the doing business world there are a group of elites in countries that are challenging this whole mechanism because it hurts them because they have their cousin who owns the newspaper or they wanna stay in a $6,000 hotel and if you never name these actors if you never actually name the sides who are winning and losing from this if you never say we're on the side of small businesses here and it's the big guys who refuse to be transparent refuse to be accountable who will lose if you don't name that you lose the chance to get all of the passion that could come from your civil society engagers so my first challenge with you would be to be more explicit about that and to help us connect the dots the worst thing you should do if you want civil society supports is inadvertently take sides in a way you don't mean to and that will actually alienate you from us and so here is an example of that there's so many great anecdotes and stories in the report but the one that I particularly liked was the callback to Jean-Baptiste Colbert who was the French philosopher and minister of finance to King Louis XIV who remarked, I don't know if you read this, I liked it the art of taxation consists in so plucking the goose as to obtain the largest amount of feathers with the smallest possible amount of hissing love that and I think that is particularly appropriate in this town right now we are still in Washington and in the United States having in my view precisely that conversation about taxation because the rule is if you say the words you will somehow have either explicitly or inadvertently taken sides in a stale ideological debate we can't even use the words redistribution without half the people walking out of the room I wasn't choosing it in an ideological way, please stay there needs to be a serious discussion around what we are saying in the doing business indicators about the role of taxation and here would be my challenge when you make a statement in your taxation indicator that paying less taxes is a sign of progress you are taking sides and I wanna know if the doing business leadership means to take sides in that discussion that you think it's a better thing that public resources should be diminished so that they have less funding to create the enabling environment for people to get the public goods and services through which they can start their businesses if you make as one of your sub indicators the reducing of taxes an indicator if you tell stories about the great advance in having country X I can't remember the exact one charge 2% less in taxes you are taking sides in an ideological debate and I don't think you should be I think you've got it wrong so what I would say to the doing business folks look 10 indicators we agree with pretty much all of them as an institution there is some debate about some of them I frankly as Oxfam America and as an individual think that we have to do some harder thinking about some of those indicators and we've frankly gotten it wrong in the past I do think we're right about this tax issue I do think that the future of the development discussion if it isn't about us if it is about helping economies become more robust if the real innovative flow of financing our fiscal flows and we've got to find a way to get that right if we are all collectively concerned about a leak capture of the wrong form then I think we ought to be more sophisticated about this I do think the doing business indicator needs to take another look at that and but in the end of the day the biggest thing I want to say is I think you are getting it right by starting to bring this discussion into the mainstream by asking civil society to opine and give us the tools to help you in the larger cause that everybody has spoken about so far which is helping these economies become more fair and create what is that great American idea genuine equality of opportunity for everyone to lift themselves out of poverty so thanks for that well thanks to all three of you for your observations and I'm going to just throw out three things that I'm hearing first I'm kind of surprised to hear two tough guy Republicans and one soft-hearted CSO guy talk about doing business really in terms of how do you get the poorest people to have a better means and a better life because I don't think that conversation happens a lot and I think that's what you're saying Paul is that we need to have a lot more of that passion about why is doing business sort of not just sort of a top heavy multinational company wants to come in and do well why actually is it important for poverty and you guys have just articulated it in a very effective way I think the second was just I'd like to see what your thoughts are in terms and you I think have all refuted this just now but in terms of saying that these indicators this is a Western model this is how sort of America and Europe operates and other countries can't be held it's just not culturally sensitive and third I'm going to ask the other two folks to comment on your tax proposal here if you three would just sort of comment on the poverty piece the Western model and then if you want to make a comment about Paul's tax proposal that would be great and then we'll open audience questions. Sure well let me I actually agree half with Paul because I think some conservative and I am people don't think I'm a I am a conservative Republican okay I'm not a moderate Republican if you look at my voting record in Massachusetts when I was in the state legislature for 12 years and while I was basically the finance minister and you will know what my ideology is okay however the notion that poor countries can develop without any tax revenue is preposterous and without revenue we wouldn't have I mean we need an FBI look what's happening in Boston no FBI how do you fund the FBI you have to have tax revenues the question is not the Republicans have badly named a badly framed this issue the issue is the entitlement programs which are 60% of the federal budget that's what the problem is no one wants to talk about it because they're so popular but that's but my point here is I agree with them half that we cannot say cutting all taxes and all developing countries is going to result in growth that we know that's not true you have to have roads you have to have an educated citizenry you have to have some minimal healthcare system at a minimum because if everybody's sick if there's 95% of literacy as we're finding out in southern Sudan that's a huge problem in terms of economic growth on the other hand if you have confiscatory levels of taxation particularly on business and wealthy people they have ways of leaving they just move their money elsewhere and it's extremely destructive to business and people find ways of going around the system just not paying taxes I'm a Greek American I actually used a doing business report you know Greece is ranked in the UNDP Human Development Index is one of the highest developed countries in the world 19 or 20th the last time I looked on the doing business report and the corruption index from transparency it's like 60 or 70 it's not a developed country and I said that in Athens at a big forum it caused a little stir and I said someone has to ask the question what you're asking me I don't know anything I'm not an expert in the Greek economy but just look at the question the data here these indexes are very useful why is there are many developing countries much higher ranked in terms of the transparency index for transparency and on the doing business report I said you have to ask the question why do Greeks in Greece the word entrepreneur the word entrepreneur is a word that describes thieves now in the Greek and they've done two studies empirical studies of the only community that's richer in the United States than the Greek Greek America is the Jewish community we are the second ranked in two studies based on census tract data why are the Greeks rich here and in Australia and in Britain and in the rest of Europe and not in Greece it's because of the legal system and it's because of the doing business rules it's because the whole system is designed and one of the factors in Greece is they have very high levels of taxation they do and no one pays any taxes it's an extremely corrupt system I don't want to go into the details of how that works so I think we have to we have to ask the question are confiscatory levels of taxation the French government was talking about a 75% tax level for rich people I mean what is that what do you think people are going to do anybody who's rich will just move all their stuff about a French was which is what they're doing on the other hand saying that you don't need any tax revenue to run a government is preposterous is preposterous here and it's preposterous in the developing world so I think we need to I am not an expert and I don't want to start making recommendations but I would urge a more nuanced view of this I don't know what the right numbers are but maybe some empirical studies on when like Paul Collier did in his bottom billion where do we reach a point where the level of taxation actually does affect growth and where when it's two when there's no revenue is there a problem I might add the second bigger issue is not just the levels of taxation it's the collection of the taxes either you don't collect them or they're collected in a highly erratic way so there's no no one gets paid half the time in many bureaucracies in the developing world and the other big problem of course is corruption in the tax system is it's an invitation to extract rents from people and that's not what we want push the button so just a few points I mean I don't know that I have a lot to add to that with respect to poverty and the relationship between the doing business report and poverty I mean that's really the whole point I mean for the most part the issues that the elements that are being measured on the doing business report I mean so they are not in any way irrelevant to large international investors but they aren't fundamentally what's going to affect those types of investment decisions they're not irrelevant but they're much much more relevant for the small business person or the non-small business person who wants to become a small business person and the issue about inefficient regulation is primarily about the local person who has an idea who has the energy to start something and their ability to start something and that is what's fundamentally important to private sector growth here or anywhere and that's really the issue I mean I think there's a very tight connection I'm surprised that people look at this as something that's really a tool for business as opposed to a tool for development a Western model I just think that's close to absurd I mean you just look at the list there are a lot of non-Western countries that do just fine on the list if there was something that was inherent in the doing business assessment process that was inconsistent with non-Western ways of being they wouldn't be there on the tax issue I could talk a long time about the tax issue but I do think that taxes have to be thought about sensibly it is obviously too much of a shorthand to say that always and everywhere every tax reduction is a good idea on the other hand an inefficient tax regime which can include a high nominal rates that simply aren't being paid is an invitation to corruption which is in itself a separate but related problem for development and so I think that a focus on tax regime including levels of nominal taxation is appropriate for that reason because it just it is a experience shows that while there's not an inevitable intellectual connection between the two there is a practical connection between high levels of taxation and high levels of corruption because people are just not going to pay them I am provoked by the very last comment that Randall made I do think this is about a Western model and I think we are winning and I know that is provocative but I'm also a fan of Alexander Hamilton Federalist paper number 10 that was about fundamentally regulating factionalism creating a separation of powers making sure that if you were going to really tackle the power of elite capture you needed to make a set of rules that everyone could live by and incentivize people to act in their own interest to live peacefully Madison I thought you said Hamilton Oh I'm sorry you're absolutely right I apologize and I need a hint to your lesson no you're absolutely right it was Madison so maybe we have a Madison Hamilton difference it's absolutely true I remember the paper I remember the paper and I got the author wrong and maybe I'm not such a fan of Mr. Hamilton then I mean here's the here's the but that was the argument it was an argument look one more example yesterday we had a conversation about a land transparency index that being quite honest we supported for some time but Oxfam China asked us to pull out of because it was making evidence a set of transactions around who was getting land who was getting pushed off land how it was happening that many Chinese companies were uncomfortable about and they did not necessarily embrace that the best way to achieve growth is by creating a transparent set of rules of the game that that would ultimately benefit everyone and I think we're all very keenly aware that some of the Chinese companies out there are doing better business that are doing more creative things but there is a set of ideas that is being debated around what is the foundation for good business and I do think there are ideological differences and I don't actually think it's that provocative a sentiment to share that the Western model that was basically transparency has got to lead in the end of the day to citizen state accountability and that has got in the end of the day to lead to better service provision which creates an enabling environment for people to lift themselves from poverty is winning that is the only serious theory of change in development right now we can argue about who's winning more and less and that's why I make the taxation point but and I want to come back to what Andrew said because I do think he missed it but in the end of the day the answer to your question is yes it is a Western model I think it doesn't help us politically even for me in this room I'm sure there are thoughtful Chinese colleagues in this room who say you're not making any friends by being explicit about it but I think at some level we should be transparent about the transparency discussion on this question of tax I think the one thing that Andrew didn't say and I think needs to be said is look all tax systems either by intent or somewhat inadvertently and sometimes covertly or either more or less regressive or progressive when you fail to tax businesses and governments need to pay in an aid diminished world for public goods and services they're going to go somewhere so when you take away taxation from business where does it go? it goes as it's going right now in sub-Saharan Africa almost across the board to ever increasing that on basic goods consumer tax that's regressive it goes on labor that's regressive so you are making a choice when you say you know what we're going for a certain type of growth and we're not going to tax businesses and as the doing business indicator we're going to reward countries that lower their taxes of businesses if you want to say hey I'm an ideologue who believes that that kind of growth will be better in the long run fine but let's be my provocation back to you is let's be explicit about the choice we're making about how we're going to lift people from poverty and I would say no you do a better job by getting a better balance particularly in the continent that is growing fastest of all and you don't need to incentivize corporations in the way you did 10, 15 years ago to get in there and small businesses to set up I think now the time is to shift and start looking once again at putting a slightly bigger burden on corporations and medium businesses and small business and get them into the formal economy but let's have that discussion is the point I'm making great well thank you and I think we have a few minutes left to take some questions Mr. Wolfowitz you want to start out? Sorry if I'm hogging the mic but first I have to say I came here hoping to hear Simeon talk it's a fantastic panel I'm really glad I got a chance to hear you it's very very interesting but someone once said that if you're going to change a much loved policy keep the old name and if you want to keep the policy the same change the name and I'm I don't believe in the suggestion I'm about to make but it seems to me it's at least worth thinking about the fact that the name doing business report kind of suggests that the report is neutral with respect to business and then it immediately comes to mind that somehow this is for the exons and Coca-Cola's of the world and of course the truth is exactly the opposite they have no problem as someone pointed out paying $4,000 to open a Coca-Cola franchise somewhere it's about small business and I wonder if it somehow couldn't be called the small business report because it seems to me that's what it's about great I'm going to ask for a couple more questions oh Dan has a question I'm just going to note that we hear at least once a day on the subject of the greatest Americans Dan tells us that Andrew Nazio is one of the greatest Americans so forget Jefferson forget Hamlin it's not bragging if it's true so I'm thrilled to have all three of you on this panel and thank you Joanna for moderating this I just think this issue of taxes particularly thorny one I wrote about this for shadow government which is a Republican blog and I was making all the positive arguments on behalf of why Republicans should pay attention to this issue and I said okay now am I going to put in there oh and they'll pay more taxes I said maybe I'll leave that one out so you're right Paul you put your finger on something that this is not this is not but I think we hosted the head of the DAC here yesterday and we had someone from the French government and if you look at how development is going to be financed it's not going to be ODA it's going to be through tax revenues UNDP said there's been a quadrupling of tax revenue in Africa from a hundred billion to four hundred billion dollars in the last ten years I mean compare that to how much ODA there is in Africa so maybe 60, 80 I mean it's a huge number so getting a handle on how governments collect taxes I think there's a second argument about okay but in some ways it's sort of a conversation for within a society about I think you're certainly I think outside forces can make arguments about what's that what's that level look like it sure as hell ain't 75% is probably a reasonable guess so I think you've put your you guys have put your finger on something that I think we we need to do a far better job on I'm just wondering I want to put Michael Klein and maybe Juan Jose de Boob on the spot on this issue of taxes and I'm sure you'll both thank me for putting you on the spot on this but could you I just on this issue of both could you Michael talk to this issue as having you know you you had this discussion in terms of thinking about what what that looks like and then Juan Jose you are a finance minister in El Salvador you had to think about these issues of taxes you're in a country where some people don't want to pay their taxes or look for ways to avoid it I'm gonna ask Michael to speak first because I know this this is one of the indicators and there's some debate but I think then there's some harder choices for policymakers who actually have to to make these decisions in government in El Salvador elsewhere so Michael that's okay thank you okay thanks Dan I'll the way we've looked at the tax debate and this has been there for all of these debates have been there for 10 years and on the tax debates the empirical studies that have been behind this and had looked at this and the way the indicator is designed it's not an indicator of the tax system as a whole it's an indicator of how complicated tax payments are made for businesses plus what the rates are the marginal tax rates and when you look at the empirical evidence for the relevant empirically existing range of tax systems in the world the overwhelming evidence shows that if you lower the nominal rate made the payments of taxation easier et cetera you actually get more aggregate tax revenue that's in most of the studies that's for most of the countries that's the evidence so the direction in which the indicators drive countries typically would give them actually more revenue overall so this is the issue of the rate versus as Randy said and the actual revenue one of the intriguing facts in the world that comes out from doing business which I didn't expect in the starkness is that the marginal tax rates on business are highest in the world in sub-Saharan Africa and that's also where lease taxes are paid and so it's this evasion issue that is there that is one so the as this is a Republican event here maybe at some level uh... no no it's not but that the word Republican I'm German I'm from a different place uh... I don't know what party I belong to the uh... but uh... the Laffer curve is alive and well no so in in most of the world and intriguingly as has been mentioned already Scandinavia is ranked very high on everything so tax systems very extensive tax systems which provide very extensive social safety nets are quite compatible uh... with what doing business says I would then there's the broader debate on whether what's an optimal tax system look like and uh... I think Paul you went a little bit in that direction arguing about shift from business taxation to VAT so indirect taxation just as a side remark I would say in Africa to my mind the big issue is that uh... the movement to VAT was driven by the attempt to get off trade taxes into indirect taxes more broadly imposed not so much away from business taxes as such and personally my view would be uh... this is outside the business scope that the issue of progressivity is an issue of personal income tax uh... business tax gets passed on uh... but progressivity you need to discuss under personal income tax which is not captured thank you well what I just like to say is that uh... in nineteen ninety eight uh... when I started in government there were one hundred and thirteen different taxes uh... in the country we simplify that into three uh... and we lower the import duties for uh... intermediate goods and uh... basic raw materials in order to motivate more investment in the country so simplification is very important uh... I wanted when I was a minister of finance to actually put a flat tax but the choice was between dollarizing the economy and having a flat tax which I think is more fair but we didn't have enough political capital to do that uh... so simplification of the tax system and expanding the tax base uh... is key uh... for uh... countries like El Salvador and others to to actually to progress and we can have a much longer conversation on on taxes but I think we are talking about making sure that they're doing business or the small doing business uh... report uh... continues to to guide many decision makers in the right direction and as I said in my intervention I have seen that uh... in over a hundred and ten countries and it would be a shame to uh... to lose that moment great well I think we're running out of time here I don't know if the three of you have any closing comments you'd like to make uh... Douglas Norris book violence and social which is quite interesting there's been a debate in the development community for a long time about whether government is necessary to development and what Douglas Norris says in his book is they've done it very comprehensive analysis they don't present all of the data in the book i think they've published it elsewhere which is all developed countries wherever they are without exception have a dense level of government it does not necessarily have to be centralized however and what they show in their studies is that there were a number of countries Switzerland canada united states australia there are federal systems that have a much smaller government at the national level and a much more dense uh... level of government at the state and local level and so you have highly developed countries with like france which has a highly centralized system and you have until recently united states with a highly decentralized system where most of public services are provided the state local level i think frankly the size of the country is required running a country of the size from a central capital doesn't really make a lot of sense if you think about what we do trash pickup and things like that but the interesting thing is all countries without exception have and the reason for it is that governments and non-profit institutions and businesses that are legal uh... this is the argument of the book a dense a dense level of institutions is what leads to high levels of growth low levels of violence and much higher levels of political stability in the protection of rights it's very interesting that uh... i mean bugglesmore's made one the nobel prize for institutional economics book in this book he goes far beyond institutional economics this is about all kinds of institutions and the question of course is how you create the institution that's been the debate for a long time but i just want to add to that little debate and you can the conservatives are right in the liberals are right which is the data that you can have a highly decentralized society but you cannot have a government uh... country with no government and have it develop you just can't so the lays a fairly complete libertarian argument does not work and there's no empirical evidence to support but you can take them my view which is that the united states in our system in many other countries it is much better to have these services provided and uh... power made uh... decision-making made at the state and local level around the national view can be a liberal and be in favor of them not arguing you can't but both positions can result in and highly developed society uh... thank you will first thanks i really enjoyed being part of it i thought it was a very useful and discussion really appreciate the comments also from the audience uh... talked with us i hope you write about your idea on uh... renaming this the small business report at some point i hope others hered it i think it's it could be precisely the kind of idea that helps us understand particularly those of us who understand that uh... one who are asking the question who is this trying to help which side is this on naming at the small business report for all those who are agnostic and just hear the word business and say oh that's not us i think that would really help you know i spoke with a small business owner yesterday an american small business owner who said you know there's something wrong with the fact that i pay more taxes than general electric it just doesn't make sense to me and i'm talking to other small business owners and they feel that way too and there is and there is a growing discussion around that i do think comments well taken on the progressivity question but there is this question that small businesses are asking in the united states around the world of course will pay of course we want to be part of the formal economy but we want to pay our fair share and we want to know that those who are getting the most profit from the system are are also being progressively challenged to pay their share too despite whatever challenges there are to the growth discussion so just to say i'm really glad that we had some of that debate around taxes it does need further discussion uh... but i think we all share a desire to side with the small business owners of this world and create the space for them to do what they do so well uh... uh... i i'm not sure that i would say anything is less common other than to reiterate that again i think this has you know i i think the reception among the consumers of data if the world bank wants to be sort of a a knowledge bank as well as uh... uh... as part of its development mission the consumers of that data of that knowledge of that information have shown by their uh... acceptance in the attention paid to this that this is among the most successful products of that sort that the world bank produces doesn't mean that it's a perfect product uh... but it is certainly among the most successful things that the world bank does in this area and i just think it would be an extraordinary decision for any organization of any sort to take one of its most successful efforts ended well thank you all three of you for this very thoughtful and serious discussion thanks to you uh... will clear the way but please join me in thanking our panel thank you all very very much thank you randy thank you paul thank you andrew thanks andrew gets the uh... that the award for travel the longest to be here for this and i know you extended your travel to be your stay to be here thank you andrew thank you very much thank you joanna i'm gonna ask i'm gonna ask michael michael cline to come up and just say a few words he's going to join us for a panel but really michael was president at the creation and provided the bureaucratic political cover but also the thought leadership as vice president for the private sector division at at the world bank group when this was going on and has been really a uh... a real partner to me in this process i'm gonna ask michael to make a few words from the podium uh... and uh... i'm gonna michael please come up to the podium and make a few words if you would and then we'll we're gonna be having a break right after that thank you very much just a button right thank you dan and uh... just a few remarks so i was the vice president or the director at the time in the world bank when the doing business report was launched i didn't invent it i was the venture capitalist if you like uh... simion came with the idea uh... i funded it uh... and supported it and in the light of the discussion let me just make a few generic points uh... and i'm not going to talk about the engine room of doing business where lots of detail that one needs to understand to be on top of all the debates about uh... some broad points first of all what is the report fundamentally all about it's on it's about success on the basis of rules are not on the basis of connections and if there is one person in some sense that may be looked upon as expressing the very nature of the issues it's mohammed was easy who as you may recall uh... and put himself uh... in flames and uh... and triggered the arab spring uh... that was one of the street vendors that were put pushed outside the formal system subject to harassment etc where rules were abused uh... to to hurt him uh... and it's the plight of people like that that the doing business report tries to address people who are being pushed into informality as has been put before uh... and who have not a chance be successful on the same basic rule playing field as others that is what it is about it's not about helping big business particularly or any particular part of society otherwise or promoting a neoliberal agenda or whatever it is it is about success on the basis of rules and when we look at how countries have actually acted as long as this can be tracked and it's the first time that we actually can track what countries do with this agenda for the last ten years intriguing to see that out of the hundred and eighty five countries that are now covered by the report only two have somewhat systematically undertaken policies that go in a direction not compatible with an improvement in doing business rankings and those are surprise surprise venezuela and zimbabwe everybody else in the world uh... every government de facto agrees with the agenda and is making steps bigger or smaller uh... to help improve things in that direction and that includes a lot of countries in africa uh... some of the african renaissance is under pinned by these regulatory efforts in eastern europe in the o cd countries it includes countries such as china which has been a significant reformer uh... over the ten years uh... that we track data on uh... it's includes france in the o cd whatever official positions might be etc the revealed preference of pretty much every government in the world is that this agenda makes sense and the only question is uh... how to bring that uh... out and clearly keep measuring that the second thing is uh... and i'm at elaborating a little bit about some points which have already been made it is not about helping incumbent businesses strengthen their position it is about opening up the playing field opening up for new entrance offer new challengers etc and there's some interesting anecdotes about that mexico provides one with a mexican government a few years back tried to pass a new securities law uh... and it tried to improve financial sector regulation uh... make the market more transparent protect investors better etc so a lot more new regulation which doing business uh... supported and they use the doing business report to demonstrate to parliamentarians that even opposition proposal went through it would actually deteriorate the rankings where as the government proposal would improve them and the opposition proposal was promoted by an incumbent player who didn't want the market positions to be challenged uh... and so this was a case with a doing business report was used by a government not only to make more rules and more regulations so it's not a deregulation agenda per se but a regulation that improves protection for investors puts everybody on playing fields allows new entry into the market and uh... as greece has been mentioned before in that context uh... he's another tiny little anecdote few years back before the financial crisis erupted we were called by some bureaucrats in the government of of greece to have a look at what we could do about promoting doing business type reforms because there were some who wanted to do that within greece and one of the examples was striking uh... of the give you a flavor of what the rules and capsule encapsulate the rules in greece for business registration so here uh... this is when you normally talk to governments and say here you have a complicated set of rules uh... like an adrenacea is mentioned with uh... mister mellis in ethiopia and if you really demonstrate the rules are not very helpful etc most governments uh... say okay it's good it's politically popular to help small business businesses etc is often an administrative act that can make things better etc but in greece that was not possible why because it was a complicated system of setting up enterprises with lots of processes and at many steps fees were collected and the fees were funding the pension fund of the lawyers in greece uh... and so the lawyers of course are well represented in parliament etc so the people who had to undo the system would undo their own pension system uh... and so that did not happen it was almost impossible and to this day has not quite happened all those on the agenda right now again so this is an as an example that doing business is not there uh... to protect existing power positions but on the contrary to open up the field for everybody on an equal playing field small businesses in particular and then has been mentioned already ten scandinavian countries are top-rated all the scandinavian countries either civil law countries so there is no particular issue to this debate about uh... civil versus common law that are unfortunately from time to time creeps into this civil law countries can do just as well as anybody else scandinavian countries are one of the uh... sets of examples that show that they show how you can how the very basic point makes sense of having a business environment that generates growth that allows you to fund uh... a sensible safety net so this is what uh... we de facto see around the world and then when it comes to uh... the point that randy quarrels mentioned about uh... how do investors look at this and what is does it mean for investors and would investors for example look at all countries ranked them from one two hundred and eighty five and all the lines somewhere what would you say sixty eight or or whatever the number might be actually most investors wouldn't look at that and if they did uh... they would lose money uh... because the the basic investment hypothesis that from the time in the world bank group in the i f c the private sector arm as well as lots of private equity houses uh... that you would have in your mind is distinguished three investment situations in the world you have a country or a company that is lousy and that is not going to improve which makes no effort to improve is that a good investment uh... object probably not then there are countries that are actually in great shape or companies that are in great shape and it's easy to operate easy to invest is that a good investment opportunity yeah that might be something but it gives you limited upside the real thing the real prize is to find a country or a company that is currently not doing so well but it is willing to improve and that is making efforts and figuring out that that is the big prize and so it's the reform effort not the absolute ranking that matters for countries getting ahead for attracting both domestic as well as foreign investment even though doing business only talks about domestic investment and that is what we see in the numbers uh... and in the analysis so altogether once again sort of basic message is success on the basis of rules is a policy and program of economic inclusion